Steve Wolff, DDS
As more practices established in the '60s, '70s, and early '80s enter the market, it seems likely that a good number of them will need to be merged into existing practices in order for the retirees to perpetuate care of their patients and maintain custody of records.
Whether it be local demographics, lack of current technology, or insufficient revenue, a significant number of retirement age doctors will not find buyers to sustain their practices into the next generation. Positioning their practices for merging with other practices may well prove to be the best of exit strategies. As we gain more experience with this model, certain factors contributing to the marketability and successful transition of these practices seem to bubble to the top.
Retaining one or more key staff people-It's no secret that many patients have more connection with the office manager, assistant, or hygienist than they do with the doctor, and having one or more of them come to the new office has a very powerful effect on patient retention. Besides their familiarity with patients, a willingness on the part of staff to promote their new boss goes a long way toward acceptance of the new doctor and office. If properly handled, preappointed hygiene visits can be "money in the bank" for the new doctor.
Geography matters-Although it is surprising how far patients will travel to a new location, common sense suggests that the closer the office is to the old location, the more likely patients will visit the new doctor. Patients of a mature practice might have all lived close to the office initially, but over the years they may have moved a couple of zip codes away. Even though dental care may require only a few trips per year, some patients may be reluctant to drive past numerous other dental offices to see a new doctor. We suggest that the buyer review a zip code report as part of his or her due diligence to predict the number of patients who will eventually make the trip.
Fees and insurance compatibility-Buyers need to closely review fees and make sure they are relatively close to those in their office. If the retiring doctor has not kept current with fees, the buyer may find himself or herself in the role of the "bad guy" when introducing patients to the realities of current UCRs. Patients may feel that the new doctor is overcharging and may leave the practice. Ironically, even if they go somewhere else and find out the facts of life, they will not return to the original practice. By the same token, careful review must be made of participation in various insurance plans. In today's world, if you do not accept patients' insurance, they will likely go elsewhere.
Letter to patients-Perhaps nothing is more important to a successful merger than the careful construction of the selling doctor's retirement letter. Since there may not be an opportunity for the selling doctor to continue seeing patients, announcing his or her plans, sincerely introducing the new doctor, and advising patients regarding the custody of their records will go a long way toward "laying the sword upon the shoulder" of the new owner. Patients trusted the seller for years and will generally trust his or her instructions about visiting the new practice.
Diplomacy-Although the buyer will need to review records and should know the seller's reputation within the dental community, the new doctor will need to be especially careful about being judgmental regarding treatment patients received under the care of their trusted friend, the outgoing dentist. The new dentist should work first to build a relationship with patients and then educate them about the new treatment philosophy and plans. Expect that the newly acquired patient base may have a disproportionate percentage of older people, and being sensitive to their needs will go a long way toward keeping them in the practice.
When properly executed, a merger may be the fastest and least expensive way to expand a practice. Buyers need to do their homework and be as sure as possible that they're getting what they think they're getting. Fair pricing of the target practice and good planning will return buyers' investments many times over. Their only regret will be that they didn't do it earlier.
Steve Wolff, DDS, is a member of ADS and the broker/partner in EMA Dental Practice Sales (formerly Evan Myers and Associates) in Kansas City, Missouri. Contact him at (888) 419-5590, ext. 816, or visit the company's website at www.emadentalpracticesales.com.